But a cool new plan could save the day

Announcements of the “hottest year in recorded history” are becoming annual events.

Another beautiful sunset.

Evidence is mounting that drastic climatic changes are under way, driven by the 6 billion tons of heat-trapping carbon dioxide that humans pump into our atmosphere each year.

In 1998 alone, we saw a crippling ice storm in Quebec and New England; uncontrolled fires in Brazil, Mexico, and Florida; killer heat waves in the Middle East, Texas, and India; Mexico’s worst drought in 70 years, followed by intense floods; massive flooding in China, which left 14 million people homeless; the worst flood in the history of Bangladesh, which left 30 million people homeless; an extensive drought in Vietnam; and 9,000 hurricane casualties in Central America.

Most alarming is the accelerating rate of climate change. As recently as five years ago, most climate scientists said they expected to see significant signs of climate change in the middle of the next century. Now they are seeing those signs today.

Last summer, I took part in a gathering that hammered out a new set of strategies for dealing with our mounting climate and energy problems — the World Energy Modernization Plan. We hope it can redirect the debate about climate change solutions and ultimately lead us toward sustainability. But it will be an uphill battle.

Negotiation Aggravation

First, a review of where we stand.

Even as the climate becomes increasingly unstable, the U.N.-sponsored negotiations on the Kyoto climate change treaty are limping toward terminal stagnation, and perhaps even collapse, largely because of U.S. intransigence.

Last summer, Republicans in Congress, spurred by the wealthy and powerful fossil-fuel lobby, passed a bill prohibiting the EPA from taking any action even “in contemplation” of implementing the Kyoto treaty. Sen. Chuck Hagel (R-Neb.) cosponsored a resolution demanding “significant participation” from developing countries as a condition of U.S. ratification, then pushed through a bill forbidding the Clinton administration from spending any aid money to secure that participation.

Meanwhile, U.S. negotiators are butting heads with the European Union, insisting that the U.S. be allowed to meet its treaty obligations with unlimited international emissions trading — though such trading is unmonitorable and unenforceable, given the immense number of carbon source points and the lack of a unified regulatory system. And while wealthy nations want to use 1990 emissions levels as a basis for allocating emissions rights, many developing nations argue those rights should be allocated on a per capita basis.

All this squabbling surrounds proposed emissions cuts in the range of 5.5 percent. But what we really need to restabilize the climate are cuts of 60 to 70 percent, according to the Intergovernmental Panel on Climate Change, a body of more than 2,000 scientists from 100 countries. What nature requires, in short, is a massive global transition to renewable energy sources and high energy efficiency.

Wind instruments.

Photo by Warren Gretz, NREL/PIX.

Resistance to this shift, especially in the U.S., has been based on the fear of massive economic disruption from emissions reductions. That fear is misplaced.

A global transition to renewable and high-efficiency energy sources would substantially expand the stability, equity, and total wealth of the global economy. It would allow every national economy to develop without regard to atmospheric limits. It would raise living standards in the developing nations without compromising economic achievements in the industrialized nations.

A Clan with a Plan

In June 1998, 16 economists, energy company presidents, scientists, and policy experts, including this author, met at the Center for Health and the Global Environment at Harvard Medical School to develop a new approach to combating climate change.

The World Energy Modernization Plan, which emerged from those discussions, is designed to begin to moderate the worldwide impacts of climate change as well as reduce volatility in today’s dangerously unstable global financial structure.

The “solution” as we see it involves three primary interactive and mutually reinforcing strategies:

The first is a change in subsidy policies. Today, the U.S. government spends about $20 billion each year subsidizing fossil fuels. Globally, government subsidies for fossil fuels are estimated at $300 billion. If these fossil fuel subsidies were withdrawn, it would result in more accurate fuel prices, which would help reduce oil and coal consumption.

A solar system.

Photo by Warren Gretz, NREL/PIX.

Putting this money into subsidies for renewable energy development would provide major incentives for the world’s energy companies to invest in fuel cells and solar, biomass, and wind power, boosting renewable energy into the big leagues of global industry. At the same time, a portion of the money formerly spent on fossil-fuel subsidies could be used to retrain displaced coal miners and other fossil-fuel industry workers for jobs in the renewable energy industry or elsewhere.

A second strategy is the adoption of a progressively more stringent fossil-fuel efficiency standard for all countries as part of the Kyoto Protocol, as a complement to — or substitute for — the ineffectual scheme of emissions trading.

To use one example from the electrical generating sector, a normal coal-fired generating plant achieves about 35 percent efficiency. By contrast, a high-efficiency, gas-fired cogeneration facility achieves from 75 to 90 percent efficiency. Simply by switching from coal to gas-fired cogeneration, we could cut our emissions from the electricity sector by more than 50 percent. Similar efficiencies can be achieved in transportation, industrial use, heating, and cooling.

Globally, a progressive fossil-fuel efficiency standard adopted by both developing and industrialized nations would create an immediate worldwide market for renewable energy. If each nation — beginning at its current baseline — were to commit to increasing its fossil-fuel efficiency by specified rates at designated intervals, that would also sidestep the current impasse between industrialized and developing nations over the equity of the emissions “cap-and-trade” regime envisioned in the Kyoto Protocol. (It’s worth noting that by a fossil fuel standard, all non-carbon renewable energy sources are 100 percent efficient.)

The establishment of progressive efficiency and renewable standards — together with the elimination of regulatory barriers to competition — would allow free energy markets based on the dual criteria of efficiency and price.

We believe that these elements, along with shifts in subsidies, would be enough to initiate an energy transition in the industrial world.

Sharing the Wealth

Unfortunately, the largest sources of greenhouse gases in the coming decades will not be the U.S., Japan, and Western Europe. They will be China, India, Mexico, Brazil, and all the developing countries working to stay ahead of the undertow of chronic poverty.

Any viable strategy for addressing climate change requires the transfer of climate-friendly energy technologies to the developing nations — virtually all of which would be happy to switch to solar, wind, and hydrogen and virtually none of which is capable of financing that transition by itself.

The third strategy in the World Energy Modernization Plan centers on a vehicle for f
inancing this major transition to clean, efficient energy in the developing world. We propose a tax on all international currency transactions. These transactions today total about $1.3 trillion per day. A quarter-of-a-penny tax per U.S. dollar on those transactions would yield from $200 to $300 billion a year (after other costs) to finance wind farms in India, solar assemblies in El Salvador, cogeneration plants in South Africa, and fuel-cell factories in Russia.

James Tobin, a Nobel Prize-winning economist, initially conceived of the tax as a method for stabilizing international capital flows. Of all the various mechanisms that have been proposed, a tax on currency transactions seems to be the most equitable, non-discriminatory, and broad-based. It would be spread throughout the whole capital structure and be virtually “invisible” to consumers.

However, there are other funding sources with comparable revenue-raising potential, including taxes on carbon-based fuels, taxes on airline tickets, and diversion of those portions of defense budgets dedicated to protecting the security of oil commerce.

Regardless of the financing mechanism, a fund of this type could galvanize the economies of the poor nations in much the same way that the post-World War II Marshall Plan galvanized the economies of Western Europe, turning dependent and impoverished allies into robust trading partners.

A global energy transition would create millions of jobs all over the world. It would go far toward reversing the widening economic gap between industrialized and developing countries. And, in short order, the renewable energy industry would become the central, driving engine of growth in the global economy.

Can We Get There from Here?

Given the short-term political outlook — nations bickering over grossly inadequate emissions cuts, the U.S. Congress refusing to consider even modest changes — a plan of this magnitude seems hopelessly unrealistic.

But significant changes are already afoot, beginning with the emerging fissure within the fossil-fuel community. British Petroleum, Sunoco, Shell, Texaco, Ford, DaimlerChrysler, and other companies are now breaking ranks with the rest of the oil and automaking industries. Two years ago, John Browne, the CEO of BP, made an eloquent statement about the perils of climate change and followed it up with an announcement that BP anticipates doing $1 billion a year in solar commerce during the next decade. Shell is investing $500 million in renewable energy sources. DaimlerChrysler and Ford have announced a partnership to begin marketing fuel-cell powered cars by the year 2002. And in February, Shell and DaimlerChrysler announced a project to run the entire economy of Iceland on hydrogen fuel.

There are changes beyond the business community as well. The issue is finally registering on the public’s radar screen. All over the world, citizens are extremely alarmed about increasingly unstable and violent weather. People are worried about their futures and their children’s futures.

Just as the physical climate is changing rapidly, so is the social and political climate surrounding this issue. A plan that may seem utterly out of reach today could become far more realistic — even inevitable — in a very short time.

Absent such a transition, of course, the outlook is frightening and depressing. The accelerating changes to the global climate — the disintegration of Antarctic ice shelves, the die-off of Alaskan forests, alterations of El Niño patterns, the northward migration of infectious diseases, the continuing succession of severe storms, altered drought and rainfall patterns, and temperature extremes — will do more than tear holes in the global economic fabric. Climate change may well prove the undoing of our organized civilization.